Weekly Brief: Battery War Ramps Up as Tesla Plans In-House Production

At his much-hyped “Battery Day” event in Fremont, California, Elon Musk revealed Tesla plans to start manufacturing its own in-house battery dubbed the 4680.

The battery is significantly larger than the Panasonic 2170 that lives in the current generation of Model 3s and Model Ys. It uses a spiral design to hold more power, charge faster, and consume less time and money during production, according to Musk. He projects that the 4680 will allow Tesla to reduce its battery manufacturing costs by 50% and become less dependent on third-party battery producers like Panasonic and LG. As a result, in three years’ time, the carmaker plans to introduce its cheapest vehicle ever: a fully autonomous entry-level sedan that sells for $25,000.

As far as blockbuster revelations go, Battery Day was a dud. Tesla stock dropped more than 10% the next day, as Wall Street investors have grown wary of Musk making big promises that he then struggles to meet. Had he revealed a new EV last week, or something even sexier like an all-electric boat or helicopter, investors presumably would have been happier.

Tesla’s stock has more than tripled in 2020, making the company the most valuable American carmaker of all time. Much of that growth has come thanks to the rising popularity of EVs and Tesla’s vice-like grip on the American market. As of August 2020, Tesla controlled more than 80% of the American market for EVs. Musk knows that other carmakers are gunning for him, whether it be Ford, General Motors, Toyota or a raft of other start-ups and legacy automakers eager to get in on the EV rush.

Last week Volkswagen unveiled a new electric crossover SUV called the ID.4. The ID.4 is VW’s first global EV to hit the market. It has a range north of 300 miles per charge and looks like your typical roomy SUV, save for the fact that it runs on battery power. Eight hours after the announcement, VW had already sold out all of its First Edition ID.4s. Paul Myles has the full story.

It’s an incredible transformation for a carmaker that, as of five years ago, was embroiled in the Dieselgate emissions scandal. The subsequent fallout left the whole auto industry with a black eye and put a seemingly permanent stain on VW’s reputation. Yet, fast forward to 2020, and VW is on course to produce 1.5 million EVs every year come 2025 and as much as 14 million cumulatively by 2028. That could make it the world’s largest manufacturer of EVs.

Given its incredible rate of growth and first-to-market advantage, Tesla can keep up with VW but only if it finds a way to introduce an entry-level vehicle. That’s why the new homemade battery is such a big deal. If Musk can slash costs and improve performance by bringing battery production in-house, Tesla may be able to maintain its advantage as the world’s preeminent EV maker. It’s currently producing prototypes of the 4680 at its Gigafactory in Nevada and experimenting with them on the road in Tesla test vehicles


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